NOTEHOLDER FORBEARANCE AGREEMENT
Exhibit 10.1
NOTEHOLDER FORBEARANCE AGREEMENT (this “Agreement”), dated as of August 14, 2009, among (i)
National Consumer Cooperative Bank (d/b/a NCB), a banking corporation chartered pursuant to the
National Consumer Cooperative Bank Act, as amended 12 U.S.C. §§3001-3051 (the “Company”), (ii) NCB
Financial Corporation, as Guarantor (the “Guarantor”) and (iii) the undersigned holders (the
“Noteholders”) of the Notes (as defined below).
RECITALS:
A. Pursuant to that certain Note Purchase and Uncommitted Master Shelf Agreement, dated as of
December 28, 2001, among the Company and each of the Purchasers identified therein, as amended by
that certain First Amendment, dated as of December 9, 2003, that certain Second Amendment, dated as
of December 28, 2004, that certain Third Amendment, dated as of December 28, 2006, that certain
Fourth Amendment, dated as of December 31, 2007, that certain Fifth Amendment, dated as of February
25, 2008 and that certain Sixth Amendment and Limited Waiver (the “Sixth Amendment”), dated as of
March 31, 2009 (as so amended and in effect on the date hereof, the “Note Agreement”), the Company
issued (i) $55,000,000 in original principal amount of its 8.50% Senior Notes, due December 28,
2009 (as amended, restated, supplemented, replaced or otherwise modified hereby or from time to
time, collectively, the “2009 Notes”) and (ii) $50,000,000 in original principal amount of its
8.50% Senior Notes, due December 15, 2010 (as amended, restated, supplemented, replaced or
otherwise modified hereby or from time to time, collectively, the “2010 Notes” and, together with
the 2009 Notes, the “Notes”). The Noteholders hold 100% of the principal amount of the Notes.
B. The Company entered into that certain Credit Agreement, dated as of May 1, 2006 (as
previously amended and in effect on the date hereof, the “Credit Agreement”),by and among the
Company, SunTrust Bank, as administrative agent (in such capacity, the “Bank Agent”), and the
lenders party thereto (collectively, the “Lenders”).
C. In connection with the Sixth Amendment and the corresponding amendment to the Credit
Agreement, (i) the Company, the Guarantor, SunTrust Bank, as collateral agent (in such capacity,
the “Collateral Agent”), the Lenders, the Bank Agent and the Noteholders entered into that certain
Intercreditor and Collateral Agency Agreement, dated as of April 30, 2009 (as amended, the
“Intercreditor Agreement”) and (ii) the Guarantor entered into that certain Guaranty Agreement (the
“Guaranty Agreement”), dated as of April 30, 2009, in favor of the Collateral Agent, for the
benefit of the Lenders and the Noteholders, to guaranty the Notes and the obligations of the
Company under the Credit Agreement.
D. The Company has informed the Noteholders that (i) it is in breach of (a) Section 6Q of the
Note Agreement (Asset Quality) beginning May 31, 2009, (b) Section 6H of the Note Agreement
(Consolidated Earnings Available for Fixed Charges) beginning June 30, 2009 and (c) Section 6R of
the Note Agreement (Return on Average Assets) beginning June 30, 2009 and
as a result thereof Events of Default under Section 7A(iii) occurred and are continuing on the
date hereof, (ii) it is in breach of (a) Section 5Q (Minimum Liquidity Amount) beginning June 15,
2009 and (b) Sections 5H(vii) and (viii) (Notice of Event of Default and Notice of Claimed
Default), in each case in respect of the Events of Default specified in this paragraph, and as a
result thereof Events of Default under Section 7A(iv) occurred and are continuing on the date
hereof, and (iii) as a result of the Corresponding Defaults (as defined below) an Event of Default
under Section 7A(vi) of the Note Agreement has occurred and is continuing on the date hereof
(collectively, the “Specified Defaults”).
E. The Company has requested that the Noteholders temporarily forbear from exercising any
rights or remedies that the Noteholders may have under, or in respect of, the Notes and the Note
Agreement with respect to the Specified Defaults upon the terms and conditions set forth in this
Agreement.
F. The Company has requested that the Bank Agent and the Lenders temporarily forbear from
exercising any rights or remedies that the Bank Agent and the Lenders may have under, or in respect
of, the Credit Agreement with respect to any defaults or events of default that have arisen, or may
arise, as a result of the Company’s breach of (i) section 6.9(e) of the Credit Agreement (Asset
Quality) beginning May 31, 2009, (ii) sections 6.9(b), (c) and (g) of the Credit Agreement (Fixed
Charge Coverage Ratio, Consolidated Debt to Consolidated Adjusted Net Worth and Return on Average
Assets, respectively), in each case beginning June 30, 2009, (iii) section 6.7(a) (Notice) in
respect of the breaches specified in this paragraph and (iv) section 8.5 of the Credit Agreement
(collectively, the “Corresponding Defaults”), and the Bank Agent and the Lenders have agreed to do
so as is more particularly set forth in the Forbearance Agreement among the Bank Agent, the Lenders
and the Company, dated as of August 14, 2009, in substantially the form attached hereto as
Exhibit A (the “Bank Forbearance Agreement”).
G. Subject to the terms and conditions hereinafter set forth, the Noteholders have agreed to
the Company’s request to temporarily suspend action in respect of the Specified Defaults.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS.
1.1 Defined Terms. As used herein, the following terms shall have the meanings set forth
below. The terms used herein and not defined herein shall have the respective meanings ascribed to
such terms in the Note Agreement or the Notes, as applicable.
“Applicable Rate” — means 13.50% per annum, provided that during any Investment Rated Period
the Applicable Rate shall be 11.50% per annum.
“Forbearance Period” — means the period from and after the Effective Date until the
Forbearance Termination Date.
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“Forbearance Termination Date” — means the earlier to occur of (a) 5:00 p.m. (New York time)
on November 16, 2009, (b) the date of the first occurrence of any Forbearance Termination Event,
and (c) the execution and delivery of an amendment and waiver agreement by and among the Company
and the Noteholders, on terms and conditions satisfactory to the Noteholders, which agreement
includes a permanent waiver of the Specified Defaults and any other existing Events of Default.
“Forbearance Termination Event” — means the occurrence of any of the following:
(a) the failure by the Company or its Subsidiaries, as applicable, to comply with any
of the terms and provisions set forth in this Agreement or, to the extent not superseded by
this Agreement, the Note Agreement;
(b) the failure of any representation or warranty in Section 3 to be true and correct,
in all material respects;
(c) any Event of Default (other than a Specified Default) shall exist or occur;
(d) (i) the termination of the Credit Agreement; (ii) the failure by a Lender to renew
a letter of credit in accordance with the terms of the Credit Agreement; (iii) the
termination or reduction after the date hereof of any of the credit commitments under the
Credit Agreement other than reductions resulting from a mandatory prepayment required
pursuant to Section 4.4 herein or similar provision of the Bank Forbearance Agreement or as
contemplated by the Credit Agreement; (iv) the termination of the Bank Forbearance Agreement
or the forbearance represented thereby; or (v) any remedies or enforcement action taken in
respect of the Credit Agreement, the Bank Forbearance Agreement or otherwise; and
(e) any payment of principal by the Company or any of its Subsidiaries in respect of
any Debt that is expressly subordinated in any manner to the Notes.
“Noteholders’ Financial Advisor” — means Xxxxxxx & Marsal North America, LLC or such other
financial advisor that the Required Holders shall designate from time to time.
“Noteholders’ Professionals” — is defined in Section 4.1 hereof.
“Retainer Letters” — means collectively, (a) the retainer letter dated August 4, 2009, signed
by Special Counsel and countersigned by the Company, (b) the retainer letter dated August 7, 2009,
signed by the Noteholders’ Financial Advisor and countersigned by the Company and Special Counsel
and (c) such other retainer letters as may hereinafter be signed by one of the Noteholders’
Professionals and countersigned by the Company in respect of fees and expenses payable by the
Company in accordance with the Note Agreement, the Notes and this Agreement.
“Special Counsel” — means Xxxxxxx XxXxxxxxx LLP or such other law firm as the Required
Holders may designate from time to time.
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1.2 Rules of Construction. All definitions contained in this Agreement are equally applicable
to the singular and plural forms of the terms defined. The words “hereof,” “herein,” and
“hereunder” and words of similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise specified, all
Section references pertain to this Agreement. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles as in effect on the
Effective Date. All references herein to “this Agreement” or to any other agreement or document
shall, unless stated otherwise, be deemed to refer to this Agreement or such other agreement or
document as the same may be amended, restated or otherwise modified from time to time.
Notwithstanding the foregoing, all provisions of the Credit Agreement and the Bank Forbearance
Agreement that are incorporated herein by reference or referred to herein in order to establish
obligations of the Company shall constitute reference to such provisions as in effect on the date
hereof, without regard to any amendments, modifications or waivers in respect thereof that the
parties to the Credit Agreement or the Bank Forbearance Agreement may agree to that are prohibited
hereunder, unless the Required Holders also agree to such amendments, modifications or waivers.
All references herein to sections or clauses of any other agreement or document shall, unless the
context otherwise requires, be deemed to refer to such sections as they may be renumbered from time
to time in connection with any amendment of the type referred to in the immediately preceding
sentence of this Section. All references herein to any person shall be deemed to refer to such
person and its lawful successors and assigns.
SECTION 2. FORBEARANCE.
2.1 Forbearance Period. During the Forbearance Period, the Noteholders shall not exercise or
enforce any remedy against the Company or the Guarantor arising solely out of, or resulting solely
from, the Specified Defaults. Upon the termination or expiration of the Forbearance Period, the
Noteholders shall be entitled to exercise all of their rights and remedies, including, without
limitation, those arising under this Agreement and each Transaction Document, or at law or equity.
Nothing herein constitutes a waiver of the Specified Defaults or a waiver of any requirement that
the Company or the Guarantor pay the amounts owing in respect of the Notes and the Note Agreement
except as expressly set forth herein, and the Company acknowledges that no Noteholder has committed
to waive the Specified Defaults, any other Defaults or Events of Default, or any payments required
under the Notes or the Note Agreement, nor shall any Noteholder be obligated to forbear from
exercising any remedies with respect to the Specified Defaults following the expiration or
termination of the Forbearance Period. In addition, notwithstanding any provision of this
Agreement, none of the Noteholders is restricted from asserting any action or position in any
insolvency proceeding involving the Company or the Guarantor, specifically including, without
otherwise limiting, any pending or future proceeding under Title 11 of the United States Code.
Each of the parties hereto acknowledges and agrees that (x) from and after the termination of the
Forbearance Period, the Notes shall accrue interest at the Applicable Rate, and (y) on and after
the Forbearance Termination Date the Specified Defaults are, and shall continue to remain,
outstanding under the Note Agreement unless otherwise expressly waived in writing by the Required
Holders. The Noteholders reserve their respective rights, in their discretion, to exercise any or
all of their rights and remedies under this Agreement and each Transaction Document as a result of
the Specified Defaults on and after the Forbearance Termination Date, provided that the Noteholders
hereby agree to waive any right to apply a default rate of interest in addition to the Applicable
Rate provided herein.
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2.2 Maturity Date of the 2009 Notes. Notwithstanding any notices provided by the Noteholders
to the Company in connection with Section 4A of the Note Agreement (which notices, for the
avoidance of doubt, shall be considered rescinded on the Effective Date), the outstanding principal
amount of all of the 2009 Notes shall be automatically due and payable in full on the Forbearance
Termination Date, together with interest thereon, provided that if the Forbearance
Termination Date occurs solely by virtue of a Forbearance Termination Event other than a
Forbearance Termination Event arising from the failure of the Company to make any payment of
principal, interest or fees in respect of the Notes when due, then the outstanding principal amount
of all of the 2009 Notes shall be due and payable on the date that is three (3) Business Days
following the Forbearance Termination Date, without any further action or notice by any Person, and
provided further that the foregoing shall not affect the right of the Noteholders to exercise any
of their rights and remedies in respect of such Forbearance Termination Event (including, without
limitation, their right to accelerate any or all of the Notes).
2.3 Limited Effect of Forbearance. Notwithstanding the forbearance set forth in Section 2.1,
in interpreting any covenants or other provisions in this Agreement and any Transaction Document
that provide greater restrictions or limitations on, or impose additional requirements on, the
Company and/or its Subsidiaries after the occurrence of an Event of Default, as opposed to when no
Event of Default exists, the Specified Defaults shall be deemed to exist and continue in effect for
the limited purpose of causing such greater restrictions and limitations and such additional
requirements to be in effect throughout the Forbearance Period. Notwithstanding anything else
herein to the contrary, during the Forbearance Period, the Company shall not be required to comply
with the terms of the financial covenants set forth in Sections 5D, 5Q, 6H, 6Q and 6R of the Note
Agreement.
SECTION 3. WARRANTIES AND REPRESENTATIONS.
To induce the Noteholders to enter into this Agreement, the Company hereby warrants and
represents to the Noteholders, as of the Effective Date:
3.1 Organization, Existence and Authority.
(a) The Company is a banking corporation chartered pursuant to the National Consumer
Cooperative Bank Act, as amended 12 U.S.C. §§3001-3051. The Company has the corporate power
and authority to execute and deliver this Agreement and to perform its obligations
hereunder.
(b) The Guarantor is a Delaware chartered savings and loan holding company duly
organized, validly existing and in good standing under the laws of Delaware. The Guarantor
has the corporate power and authority to execute and deliver this Agreement and to perform
its obligations hereunder.
(c) Each Subsidiary of the Company is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its jurisdiction of
organization. Schedule 3.1 hereto sets forth complete and correct lists of the
Subsidiaries of the Company, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the owners (and percentage of ownership) of each
class of its capital stock outstanding.
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3.2 Authorization, Execution and Enforceability. The execution and delivery by each of the
Company and the Guarantor of this Agreement and the Bank Forbearance Agreement and the performance
by each of the Company and the Guarantor of its respective obligations hereunder and thereunder
have been duly authorized by all necessary action on the part of the Company and the Guarantor,
respectively. Each of this Agreement and the Bank Forbearance Agreement has been duly executed and
delivered by each of the Company and the Guarantor. Each of this Agreement and the Bank
Forbearance Agreement constitutes a valid and binding obligation of each of the Company and the
Guarantor, enforceable in accordance with its terms, except that the enforceability thereof may be:
(a) limited by bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors’ rights generally; and
(b) subject to the availability of equitable remedies.
3.3 No Conflicts or Defaults. Neither the execution and delivery by each of the Company and
the Guarantor of this Agreement or the Bank Forbearance Agreement, nor the performance by each of
the Company and the Guarantor of its respective obligations hereunder or thereunder, conflicts
with, results in any breach in any of the provisions of, constitutes a default under, violates or
results in the creation of any Lien upon any property of the Company, its Subsidiaries or the
Guarantor under the provisions of:
(a) any charter document or bylaws of the Company, its Subsidiaries or the Guarantor;
(b) any material agreement, instrument or conveyance to which the Company, its
Subsidiaries or the Guarantor may be bound or affected; or
(c) any statute, rule or regulation or any order, judgment or award of any court,
tribunal or arbitrator by which the Company, its Subsidiaries or the Guarantor, or any of
their respective properties, may be bound or affected.
3.4 Governmental Consent. Neither the execution and delivery of this Agreement or the Bank
Forbearance Agreement, nor the performance by each of the Company and the Guarantor of its
respective obligations hereunder or thereunder, is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any Governmental Authority on the
part of the Company or the Guarantor as a condition thereto under the circumstances and conditions
contemplated by this Agreement or the Bank Forbearance Agreement.
3.5 No Defaults or Events of Default. After giving effect to the transactions contemplated by
this Agreement and the Bank Forbearance Agreement, no Default or Event of Default (other than the
Specified Defaults) will exist under the Note Agreement, this Agreement, the Credit Agreement
(other than the Corresponding Defaults as to which Lender action has been suspended pursuant to the
Bank Forbearance Agreement) or any other credit agreement to which
the Company, its Subsidiaries or the Guarantor is a party. Immediately prior to giving effect
to the transactions contemplated by this Agreement, (i) those Defaults or Events of Default
identified as “Specified Defaults” or “Corresponding Defaults” constituted the only Defaults or
Events of Default that existed or may have existed at such time and (ii) no defaults or events of
defaults (other than the Corresponding Defaults) existed with respect to the Credit Agreement or
any other credit agreement to which the Company, its Subsidiaries or the Guarantor is an obligor.
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3.6 Disclosure. Except for (a) the Specified Defaults, (b) the Corresponding Defaults and (c)
the transactions contemplated by this Agreement, there is no fact known to the Company or the
Guarantor, as of the date hereof, that could reasonably be expected to have a Material Adverse
Effect that has not been disclosed to the Noteholders.
3.7 True and Correct Copies. The Company has delivered to the Noteholders or Special Counsel
true and correct copies of the Credit Agreement and the amendments thereto (including the Bank
Forbearance Agreement) and each other credit agreement to which the Company, its Subsidiaries or
the Guarantor is a party, as each is in effect on the Effective Date.
3.8 No Undisclosed Consideration. Except as expressly set forth herein or in the Bank
Forbearance Agreement, none of the Company, its Subsidiaries, the Guarantor and any of their
respective subsidiaries or affiliates has paid or will pay, directly or indirectly, any fee,
charge, increased interest or other consideration to, or given any additional security or
collateral to, or shortened the maturity or average life of any Debt or permanently reduced any
borrowing capacity in favor of or for the benefit of, any creditor of the Company, its
Subsidiaries, the Guarantor or any of their respective subsidiaries or affiliates as a condition
to, or otherwise in connection with, the execution or delivery of this Agreement or the Bank
Forbearance Agreement.
3.9 Letters of Credit. The Company warrants and represents that, other than as set forth on
Schedule 3.9 hereto, none of the currently outstanding letters of credit issued by the
Lenders are scheduled to, or are currently anticipated by the Company to, expire, terminate or
otherwise be released or no longer be required to be outstanding by the beneficiary thereof, prior
to 5:00 p.m. (New York time) on November 16, 2009.
3.10 Existing Debt and Liens. Schedule 3.10(a) hereto sets forth a complete and
correct list of all outstanding Debt of the Company, its Subsidiaries and the Guarantor, in each
case as obligors, as of July 31, 2009 (including with respect thereto, identification of the
obligor(s) and the payee or creditor with respect to such Debt, whether such Debt is secured,
guaranteed or subordinated to any other Debt of the Company, its Subsidiaries and the Guarantor and
the dates and amounts of mandatory repayments of such Debt (whether by amortization payment or at
maturity)), since which date there has been no material change in the amounts, interest rates,
sinking funds, installment payment or maturities of the Debt of the Company, its Subsidiaries and
the Guarantor, except as set forth on such Schedule 3.10(a). Schedule 3.10(b) hereto sets
forth a complete and correct list of all Liens on property of the Company, its Subsidiaries and the
Guarantor as of July 31, 2009 that secure Debt of any Person, and identifying in each case the
obligor(s) with respect to such Debt, the property subject to such Liens and the payee or creditor
with respect to such Debt, since which date there has been no material change in the information
set forth therein, except as set forth on such Schedule 3.10(b).
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3.11 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to
the knowledge of the Company and the Guarantor after due and diligent investigation, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against
the Company, its Subsidiaries or the Guarantor or against any of their respective properties or
revenues that (a) purport to affect or pertain hereto, or to this Agreement, any Transaction
Document, the Credit Agreement or the Bank Forbearance Agreement, or any of the transactions
contemplated hereby or thereby, or (b) either individually or in the aggregate, if determined
adversely, could reasonably be expected to have a Material Adverse Effect.
SECTION 4. COMPANY COVENANTS AND AGREEMENTS.
From and after the Effective Date, and irrespective of the occurrence of a Forbearance
Termination Event and in addition to any covenant in the Note Agreement or any other Transaction
Document, each of the Company and the Guarantor, as applicable, shall comply with and be bound by
the following covenants and agreements:
4.1 Fees and Expenses of Noteholders and Noteholders’ Professionals; Cooperation with
Noteholders’ Financial Advisor.
(a) The Company shall make all payments required to be made by it pursuant to and in
the manner set forth in, each of the Retainer Letters; provided that, not later than the
Effective Date, the Company shall have paid (i) to Special Counsel by wire transfer of
immediately available funds an amount equal to the amount of any outstanding invoices
(including any invoice delivered at least three Business Days prior to the Effective Date)
plus $200,000 in respect of Special Counsel’s retainer as provided in Special Counsel’s
Retainer Letter and (ii) to the Noteholders’ Financial Advisor by wire transfer of
immediately available funds an amount equal to $200,000 in respect of the retainer amount
set forth in the Noteholders’ Financial Advisor’s Retainer Letter.
(b) The Company also agrees to the hiring and the continuing employment by the
Noteholders of their Special Counsel, and by their Special Counsel of the Noteholders’
Financial Advisor, as well as, if necessary, one local counsel for each relevant
jurisdiction (all such Persons, together with Special Counsel and the Noteholders’ Financial
Advisor, the “Noteholders’ Professionals”). The Noteholders’ Professionals shall be
selected by the Noteholders in their sole discretion. The Company shall provide the
Noteholders’ Professionals continuing access during normal business hours to the Company’s
books and records and the opportunity to discuss the Company’s financial condition,
performance, financial statements and other matters pertinent to the Noteholders’ investment
in the Company with its officers, directors, independent accountants and any financial or
other advisor or consultant to the Company (and this Section hereby constitutes permission
and direction to such Persons to discuss and disclose such information; it being understood
that the Company and/or its financial advisor shall be present for any discussions with the
independent accountants of the Company). The Company will cooperate with the Noteholders’
Financial Advisor and will respond within a reasonable timeframe to all reasonable requests
by the Noteholders’ Financial Advisor for information, documents and analyses relating to
the Company and its Subsidiaries. Except as otherwise agreed in writing, the Noteholders’
Financial
Advisor shall not have any duty to share its work product with, or accept instructions
from, the Company or any other Person.
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4.2 Yield-Maintenance Amount. The Company acknowledges and agrees that the Yield-Maintenance
Amount in respect of each of the Notes shall accrue as of the Effective Date in the aggregate
amount of $6,841,615 which shall be further apportioned ratably between the 2009 Notes and 2010
Notes such that the Yield-Maintenance Amount in respect of the 2009 Notes shall be $1,703,721 and
the Yield-Maintenance Amount in respect of the 2010 Notes shall be $5,137,894. Such amounts shall
be added to and capitalized into the outstanding principal amount of the Notes and shall be treated
as outstanding principal for all purposes under the Note Agreement, the Notes and this Agreement.
For the avoidance of doubt, after the Effective Date and after giving effect to the provisions of
this Section, no further Yield-Maintenance Amounts or Modified Yield-Maintenance Amounts shall be
payable in respect of the Notes.
4.3 Monthly Interest. Beginning with the first Business Day of the month following the
Effective Date, and on the first business day of each succeeding month thereafter, notwithstanding
anything in the Notes or the Note Agreement to the contrary, the Company shall pay interest in
respect of the outstanding principal balance of the Notes monthly in arrears at the Applicable Rate
and on the basis of a 360 day year of twelve 30 day months.
4.4 Mandatory Prepayments.
(a) Notwithstanding anything provided for in Section 4D of the Note Agreement, for
purposes of such Section and during the Forbearance Period, Specified Events Proceeds shall
(i) include (A) the Net Cash Sale Proceeds of an Asset Securitization in respect of assets
of the Company and the Guarantor, (B) the Net Cash Sale Proceeds of all Asset Sales of the
Company and the Guarantor (including sales of loans (other than to the Thrift) and sales of
obsolete or worn out equipment or other assets not necessary for operations) in excess of an
aggregate amount not to exceed $500,000), (C) the Net Cash Debt Issuance Proceeds in respect
of the sale or issuance of Debt by the Company or the Guarantor (other than Net Cash Debt
Issuance Proceeds that are subject to mandatory repayment pursuant to any requirements
governing the Class A Notes), and (D) the Net Cash Equity Issuance Proceeds in respect of
the sale or issuance by the Company or the Guarantor of any Capital Stock (other than Net
Cash Equity Issuance Proceeds (x) that are subject to mandatory repayment pursuant to any
requirements governing the Class A Notes or (y) that the Guarantor receives pursuant to its
participation in the Capital Purchase Program) and (ii) be distributed ratably to the 2009
Noteholders, the 2010 Noteholders and the Lenders in accordance with the terms of sections
3(b) and 7(a) of the Intercreditor Agreement.
(b) The Company shall make no optional prepayments to the Lenders unless the Company
concurrently makes a ratable payment to all of the Noteholders in accordance with the terms
of sections 3(b) and 7(a) of the Intercreditor Agreement.
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4.5 Letters of Credit. [Reserved]
4.6 Financial Covenants. As a material inducement to the execution by the Noteholders of this
Agreement, the Company hereby agrees that it shall comply with each of the following covenants:
(a) At all times during the Forbearance Period, unless consented to by the Required
Holders, the Company shall not permit the aggregate amount of cash and Cash Equivalents
(valued at the fair market value thereof) held by the Company to be less than $60,000,000;
(b) At all times during the Forbearance Period, the Company shall not permit the ratio
of Nonperforming Assets of the Company and its Subsidiaries to Total Loans (excluding
letters of credit) to exceed 0.075:1.0; and
(c) During the Forbearance Period, the Company (i) shall not make any voluntary capital
contribution to the Thrift (whether directly or through NCBFC) without the prior written
consent of the Required Holders and (ii) shall, notwithstanding the limitation in section
7.9(xiii) of the Credit Agreement and Section 5M of the Note Agreement, be permitted to make
a capital contribution expressly requested by the Office of Thrift Supervision or other
Government Authority to the Thrift (whether directly or through NCBFC) in an aggregate
amount of up to $10,000,000 without the prior written consent of Required Holders; provided
that the Company remains in compliance with Section 4.6(a) above.
4.7 Restricted Payments. The Company shall not, directly or indirectly, declare, order, make
or set apart any sum for or pay any Restricted Payment except for Patronage Dividends and other
dividends, in each case payable by the Company solely in common stock of the Company.
4.8 Investments. The Company and the Guarantor shall not make any of the Restricted
Investments permitted to be made pursuant to clauses (p) and (q) of the definition of Restricted
Investments.
4.9 Loans, Advances and Payments. The Company shall not, directly or indirectly, (i) make any
payments to any Person not required by a valid and enforceable contract as in effect on the
Effective Date, except in the ordinary course of business, nor (ii) enter into any contract
requiring payments to be made by the Company except in the ordinary course of business or as part
of the transactions contemplated by this Agreement.
4.10 Restructuring Plan. On or before September 15, 2009, the Company shall deliver to the
Noteholders a plan of restructuring, which shall include, but shall not be limited to, liquidity
projections and needs, proposed designations and timing of asset dispositions, and any projected
capital raises, and on or before September 18, 2009 (but following the delivery of such plan), the
Company shall meet with the Noteholders and the Noteholders’ Professionals to discuss such plan.
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4.11 Cash Flow Forecast, Other Information, etc. The Company shall prepare and deliver to
each of the Noteholders, each in form and detail reasonably satisfactory to the Noteholders,
(a) as soon as available, but not later than 30 days following the Effective Date, a
runoff analysis of the Company’s loan portfolio updated as of July 31, including projections
to and through the date the Notes are paid in full;
(b) commencing by 4:00 p.m. (Eastern time) on August 18, 2009 and by 4:00 p.m. (Eastern
time) each Wednesday thereafter, a cash balance report as of the close of business (Eastern
time) on Friday of the previous week;
(c) commencing by 4:00 p.m. (Eastern time) on August 21, 2009 and by 4:00 p.m. (Eastern
time) each Friday thereafter, a 13-week rolling cash flow forecast together with a detailed
variance report with respect to the previous 13-week rolling cash flow forecast delivered,
which shall be in the form attached hereto as Exhibit B;
(d) on the day that is 30 days following the end of each calendar month, draft monthly
financial statements including balance sheets, statements of income and statements of
shareholders equity, and on the day that is 45 days following the end of each calendar
month, final copies of such monthly financial statements; and
(e) such additional information (including information provided by the Company to its
other creditors) regarding the assets, liabilities, business and financial condition of the
Company, the Guarantor and their respective subsidiaries (and projections relating thereto)
as shall be reasonably requested by the Noteholders.
4.12 Amendments to Credit Agreement, etc. Until the termination of any forbearance or waiver
period under the Bank Forbearance Agreement, the Company shall not, without the written consent of
the Required Holders, except as contemplated by the Bank Forbearance Agreement, enter into any
amendment of, or modification or supplement to, the Credit Agreement, the Bank Forbearance
Agreement, or any related agreements, or enter into any other agreements with any of the Lenders or
the Bank Agent with respect to the Credit Agreement or the Bank Forbearance Agreement, that would
have the direct or indirect effect of any of the following: shortening the date of maturity of any
loan or note, increasing the stated principal amount of any loan or note or adding to such amounts,
adding to or making more onerous the conditions for issuing letters of credit, accelerating the
time or increasing the amount of payment of principal, interest or other amounts (other than as
required in Section 4.4 herein), increasing the interest rate or effective interest rate on any
Debt (whether by changing a contractual or default rate, changing a reference or base rate (other
than normal fluctuations in such rate as may be contemplated by changes in the reference rates in
the Credit Agreement) or by changing an interest rate spread above a reference rate), increasing
the amount of or imposing additional fees or costs, or adding covenants or other restrictions or
making more onerous existing covenants.
4.13 No Fees, etc. None of the Company, its Subsidiaries, the Guarantor or their respective
subsidiaries or affiliates has paid or will pay, directly or indirectly, any work fee,
administrative agent’s fee or any other fee, charge, increased interest, premium or other
consideration to, or has given or will give any additional security or collateral to, or has
shortened or will shorten the maturity or average life of any Debt or permanently reduced any
borrowing capacity in favor of or for the benefit of, any creditor of the Company, any creditor of
any Affiliate or any agent acting for or on behalf of any such creditors with respect to the
Credit Agreement in connection with or as an inducement to enter into the Bank Forbearance
Agreement or similar agreement, other than (a) the fees and payments described in the Bank
Forbearance Agreement (including any fees to counsel and financial advisors) and the forbearance
fee described in Section 5.5 below and (b) as permitted in Section 4.4 herein, in each case payable
under the terms of, and as disclosed in, the Bank Forbearance Agreement.
11
4.14 Meetings. The Company, the Guarantor and their respective senior management and advisors
shall make themselves available for such periodic meetings as the Noteholders or the Noteholders’
Professionals may reasonably request, to take place at mutually convenient times, in person or by
telephone with representatives of the Noteholders, the Noteholders’ Financial Advisor, Special
Counsel and any financial or other advisor or consultant to the Company and Guarantor, to discuss
the Company’s and the Guarantor’s business operations and such other matters as such
representatives may reasonably request.
4.15 Further Assurances. The Company and the Guarantor will cooperate with the Noteholders
and execute such further instruments and documents as the Noteholders shall reasonably request to
carry out to their satisfaction the transactions contemplated by this Agreement.
SECTION 5. CONDITIONS PRECEDENT.
The forbearance granted in Section 2.1 shall not become effective unless all of the following
conditions precedent shall have been satisfied (the date of such satisfaction being herein referred
to as the “Effective Date”):
5.1 Execution and Delivery of this Agreement. Each Noteholder shall have received a
counterpart of this Agreement, duly executed and delivered by each of the Company, the Guarantor
and the Noteholders.
5.2 Execution and Delivery of Bank Forbearance Agreement. A true and correct copy of the Bank
Forbearance Agreement shall have been provided to the Noteholders and shall be in full force and
effect simultaneously with the effectiveness of this Agreement.
5.3 No Default; Representations and Warranties True. The warranties and representations set
forth in Section 3 shall be true and correct in all material respects on the Effective Date and no
Default or Event of Default shall exist other than the Specified Defaults.
5.4 Proceedings Satisfactory. All documents executed and delivered, and actions and
proceedings taken, in connection with this Agreement shall be reasonably satisfactory to the
Noteholders and Special Counsel. The Noteholders and Special Counsel shall have received copies of
such documents and papers as they may reasonably request in connection therewith, in form and
substance reasonably satisfactory to each of them.
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5.5 Payment of Interest, Fees and Expenses. The Company shall have paid:
(a) pro rata to each Noteholder, in consideration of the agreements of such Noteholder
contained herein, by wire transfer of immediately available funds, a
forbearance fee, in an amount equal to 0.25% of the aggregate outstanding principal
amount of the Notes before giving effect to the capitalization of the Yield-Maintenance
Amounts set forth in Section 4.2 hereof; such fee shall be deemed earned when paid and shall
not be subject to recovery or repayment in the event this Agreement is terminated or
rescinded for any reason; and
(b) the reasonable and documented fees and expenses of the Noteholders (including
without limitation, the retainers of Special Counsel and the Noteholders’ Financial Advisor
and the reasonable and documented fees and expenses of Special Counsel incurred prior to the
Effective Date) that have been presented to the Company at least three (3) Business Days
prior to the Effective Date by wire transfer of immediately available funds.
SECTION 6. NO PREJUDICE OR WAIVER; REAFFIRMATION.
6.1 No Prejudice or Waiver. Except as provided herein, the terms of this Agreement shall not
operate as a waiver by the Noteholders of, or otherwise prejudice the Noteholders’ rights, remedies
or powers under, any other agreement or document (including, without limitation, the Transaction
Documents) or applicable law. Except as expressly provided herein:
(a) no terms and provisions of any agreement are modified or changed by this Agreement;
and
(b) the terms and provisions of the Transaction Documents shall continue in full force
and effect.
6.2 Reaffirmation of Outstanding Obligations, Ratification, etc.
(a) The Company and the Guarantor, as applicable, hereby adopts again, ratifies and
confirms in all respects, as its own act and deed, the Transaction Documents and
acknowledges (i) that all such instruments and documents shall continue in full force and
effect and (ii) that as of the Effective Date, it has no claim or cause of action against
any Noteholder (or any of its respective directors, trustees, officers, employees or agents)
or any offset right, counterclaim or defense of any kind against any of its obligations,
indebtedness or liabilities to any Noteholder nor does it have any intention of bringing any
such claim or cause of action against any Noteholder in respect of the foregoing.
(b) This Agreement shall not, under the law of any jurisdiction whatsoever, be deemed
to be or be construed as a novation of the respective rights and obligations of the parties
hereto under the Transaction Documents.
6.3 Breach of Agreement. Each of the Company and the Guarantor acknowledges and agrees that
its failure to perform any of the provisions of this Agreement or the breach, in any material
respect, of any representation, warranty or covenant in this Agreement shall constitute an
immediate Event of Default under the Note Agreement and a Forbearance Termination Event.
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SECTION 7. MISCELLANEOUS.
7.1 Successors and Assigns. This Agreement shall be binding upon and enforceable by and
against the parties hereto and their respective successors and assigns.
7.2 Governing Law. This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York, excluding choice of
law principles of the law of such State that would require the application of the laws of a
jurisdiction other than such State.
7.3 Duplicate Originals; Facsimile Signatures. Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument. This Agreement may be executed in one or
more counterparts and shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which, collectively, show execution by each party
hereto shall constitute one duplicate original. Execution of this Agreement by any of the parties
may be evidenced by way of a faxed or electronic transmission of such party’s signature and such
faxed or electronic signature shall be deemed to constitute the original signature of such party to
this Agreement and shall be admissible into evidence for all purposes.
7.4 Waivers and Amendments. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in
writing signed by the Company, the Guarantor and the Required Holders.
7.5 Section Headings. The titles of the sections hereof appear as a matter of convenience
only, do not constitute a part of this Agreement and shall not affect the construction hereof.
7.6 Survival. All warranties, representations, certifications and covenants made by or on
behalf of the Company, the Guarantor and/or any of their respective subsidiaries herein or in any
certificate or other instrument delivered pursuant hereto shall be considered to have been relied
upon by the Noteholders and shall survive the execution of this Agreement, regardless of any
investigation made by or on behalf of the Noteholders. All statements in any such certificate or
other instrument shall constitute warranties and representations of the Company, the Guarantor
and/or their respective subsidiaries, as the case may be, hereunder.
7.7 No Third Party Beneficiaries. This Agreement shall be solely for the benefit of the
parties hereto and their respective successors and assigns. No person not a party hereto,
including, without limitation, any other creditor of the Company, the Guarantor or any of their
respective subsidiaries, shall have any rights under, or as a result of the existence of, this
Agreement.
14
7.8 Waiver and Release. For and in consideration of the agreements contained in this
Agreement, and other good and valuable consideration, the receipt and sufficiency of all of which
are hereby acknowledged, the Company and the Guarantor, on its own behalf, and to the extent that
it is lawfully able to do so, on behalf of its predecessors, successors, assigns, subsidiaries,
affiliates and agents and all of their respective past, present and future officers, directors,
trustees, shareholders, employees, contractors and attorneys, and the predecessors,
heirs, successors, and assigns of each of them (collectively referred to in this Section 7.8
as the “Releasors”) do hereby jointly and severally fully RELEASE, REMISE, ACQUIT, IRREVOCABLY
WAIVE and FOREVER DISCHARGE each of the Noteholders, together with their respective predecessors,
successors, assigns, subsidiaries, affiliates and agents and all of their respective past, present
and future officers, directors, trustees, shareholders, employees, contractors and professionals
(including, without limitation, the Noteholders’ Professionals), and the predecessors, heirs,
successors and assigns of each of them (the Noteholders and all of the foregoing being collectively
referred to in this Section as the “Released Parties”), from and with respect to any and all Claims
(as defined below).
As used in this Section 7.8, the term “Claims” shall mean and include any and all, and all
manner of, action and actions, cause and causes of action, suits, disputes, controversies, claims,
debts, sums of money, offset rights, defenses to payment, agreements, promises, notes, bonds,
bills, covenants, losses, damages, judgments, executions and demands of whatever nature, known or
unknown, whether in contract, in tort or otherwise, at law or in equity, for money damages or dues,
recovery of property, or specific performance, or any other redress or recompense which have
accrued, may have been had, or may be now possessed by or on behalf of any one or more of the
Releasors against any one or more of the Released Parties for, upon, by reason of, on account of,
or arising from or out of, or by virtue of, any transaction, event or occurrence, duty or
obligation, indemnification, agreement, promise, warranty, covenant or representation, breach of
fiduciary duty, breach of any duty of fair dealing, breach of confidence, breach of funding
commitment, undue influence, duress, economic coercion, conflict of interest, negligence, bad
faith, malpractice, violations of federal or state securities laws or the Racketeer Influenced and
Corrupt Organizations Act, intentional or negligent infliction of mental distress, tortious
interference with contractual relations, tortious interference with corporate governance or
prospective business advantage, breach of contract, deceptive trade practices, libel, slander,
usury, conspiracy, wrongful acceleration of any indebtedness, wrongful foreclosure or attempt to
foreclose on any collateral relating to any indebtedness, action or inaction, relationship or
activity, service rendered, matter, cause or thing, whatsoever, express or implied, transpiring,
entered into, created or existing from the beginning of time to the date of the execution of this
Agreement in respect of the Notes, the Note Agreement or any other Transaction Document, and shall
include, but not be limited to, any and all Claims in connection with, as a result of, by reason
of, or in any way related to or arising from the existence of any relationships or communications
by and between the Releasors and the Released Parties with respect to the Notes, the Note
Agreement, the other Transaction Documents and all agreements, documents and instruments related
thereto, as presently constituted and as the same may from time to time be amended.
15
Each of the Company and the Guarantor hereby represents and warrants to the Released Parties
that:
(a) it has the full right, power, and authority to execute and deliver this Agreement
containing this Section 7.8 without the necessity of obtaining the consent of any other
party;
(b) it has received independent legal advice from attorneys of its choice with respect
to the advisability of granting the release provided herein, and with respect to the
advisability of executing this Agreement containing this Section 7.8;
(c) it has not relied upon any statements, representations or promises of any of the
Released Parties in executing this Agreement containing this Section 7.8, or in granting the
release provided herein;
(d) it has not entered into any other agreements or understandings relating to the
Claims;
(e) the terms of this Section 7.8 are contractual, not a mere recital, and are the
result of negotiation among all the parties; and
(f) this Section 7.8 has been carefully read by, and the contents hereof are known and
understood by, and it is signed freely by, each of the Company and the Guarantor.
Each of the Company and the Guarantor covenants and agrees not to bring any claim, action,
suit or proceeding regarding or related in any manner to the matters released hereby, and each of
the Company and the Guarantor further covenants and agrees that this Section 7.8 is a bar to any
such claim, action, suit or proceeding.
All prior discussions and negotiations regarding the Claims have been and are merged and
integrated into, and are superseded by, this Section 7.8. Each of the Company and the Guarantor
acknowledges that no representation or warranty of any kind or character has been made to the
Company or the Guarantor by any one or more of the Released Parties or any agent, representative or
attorney of the Released Parties to induce the execution of this Agreement containing this Section
7.8. Each of the Company and the Guarantor understands, agrees and expressly assumes the risk of
any fact not recited, contained or embodied in this Section 7.8 which may hereafter turn out to be
other than, different from, or contrary to, the facts now known to the Company or the Guarantor or
believed by the Company or the Guarantor to be true, and further agrees that this Section 7.8 shall
not be subject to termination, modification, or rescission, by reason of any such difference in
facts.
7.9 Acknowledgement. Each of the Company and the Guarantor acknowledges that (a) except as
expressly set forth herein, none of the Noteholders has agreed to (and none has any obligation
whatsoever to discuss, negotiate or agree to) any other restructuring, modification, amendment,
waiver or forbearance with respect to the Notes, the Note Agreement, the Guaranty Agreement or any
other Transaction Document; (b) no understanding with respect to any other restructuring,
modification, amendment, waiver or forbearance with respect to the Notes, the Note Agreement, the
Guaranty Agreement or any other Transaction Document shall constitute a legally binding agreement
or contract, or have any force or effect whatsoever, unless and until reduced to writing and signed
by authorized representatives of each party hereto; (c) the execution and delivery of this
Agreement has not established any course of dealing between the parties hereto or created any
obligation or agreement of any Noteholder with respect to any future restructuring, modification,
amendment, waiver or forbearance with respect to the Note
Agreement, the Notes, the Guaranty Agreement or any other Transaction Document; and (d) the
Noteholders have heretofore properly performed and satisfied in a timely manner all of their
respective obligations, if any, to the Company and the Guarantor, under any of the Note Agreement,
the Notes, the Guaranty Agreement and each other Transaction Document.
16
7.10 Indemnification. Each of the Company and the Guarantor, jointly and severally, agrees to
indemnify each of the Noteholders and their affiliates, and their respective representatives,
affiliates, directors, officers, trustees, employees, agents and professionals (including, without
limitation, the Noteholders’ Professionals) from, and hold each of them harmless against, any and
all losses, liabilities, claims, damages or expenses incurred by any of them arising out of or by
reason of any investigation or litigation or other proceedings (including any threatened
investigation, litigation or other proceedings) relating to, or in connection with, this Agreement,
including, without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the person to be indemnified). Without limiting the generality of the
foregoing, each of the Company and the Guarantor, jointly and severally, agrees to pay currently
the expenses reasonably and necessarily incurred by the Noteholders relating to any such
investigation, litigation or other proceedings (including, without limitation, the fees and
expenses of legal counsel) in advance of the final disposition thereof, unless a court of competent
jurisdiction finally determines that neither the Company nor the Guarantor is obligated to provide
such current payment in respect of such investigation, litigation or proceeding.
7.11 Tolling of Statutes of Limitation. The parties hereto agree that all applicable statutes
of limitation in respect of the Note Agreement and the other Transaction Documents are tolled as of
the Effective Date and shall continue to be tolled and shall not begin running until the
Forbearance Termination Date.
7.12 Notices. All notices and communications to the Company and the Noteholders shall be sent
to the addresses and in the manner specified in the Note Agreement. A copy of all notices and
communications to any Noteholder shall simultaneously be delivered to:
| Xxxxxxx XxXxxxxxx LLP | ||||||
| Xxx Xxxxx Xxxxxx | ||||||
| Xxxxxxxx, Xxxxxxxxxxx 00000 | ||||||
| Attention: | Xxxxx Xxxx | |||||
| Phone: | 000.000.0000 | |||||
| Fax: | 000.000.0000 | |||||
| E-mail: | xxxxx.xxxx@xxxxxxx.xxx | |||||
17
7.13 Directly or Indirectly. Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person, including actions
taken by or on behalf of any partnership or limited liability company in which such Person is a
general partner or managing member, as applicable.
7.14 Entire Agreement. This Agreement and the Transaction Documents, as amended to the date
hereof, embody the entire agreement and understanding among the Noteholders, the Company and the
Guarantor and supersede all prior agreements and understandings relating to the subject matter
hereof and thereof.
7.15 Severability. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
[Remainder of page intentionally left blank. Next page is signature page.]
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| Accepted and Agreed: NATIONAL CONSUMER COOPERATIVE BANK |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| NCB FINANCIAL CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[Signature Page to Forbearance Agreement]
| [NAME OF EACH NOTEHOLDER] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[Signature Page to Forbearance Agreement]
SCHEDULE 3.1
LIST OF SUBSIDIARIES, AFFILIATES, ETC.
[Schedule 3.1]
SCHEDULE 3.9
Letters of Credit
Schedule 3.9-1
SCHEDULE 3.10(a)
Debt
As of [July 31], 2009
Schedule 3.10(a)-1
SCHEDULE 3.10(b)
Existing Liens
As of [July 31], 2009
Schedule 3.10(b)-1
EXHIBIT A
BANK FORBEARANCE AGREEMENT
See attached.
EXHIBIT B
FORM OF 13-WEEK ROLLING CASH FLOW FORECAST
See attached.
